PROBLEM 3: Effects of errors to retained earnings. While preparing the 2019 financial statements, Amber Company discovered computational errors in the 2017 and 2018 depreciation expense. These errors resulted in overstatement of each year's income by P100, 000, net of income tax. The following amounts were reported in the previously issued financial statements: 2017 2018 Retained earnings, January 1 2,000,000 800,000 Retained earnings, December 31 2,800,000 2,800,000 600,000 3,400,000 Net Income The net income for 2019 is correctly reported at P700, 000. Requirement: Compute the correct balance of retained earnings on December 31, 2019.

PROBLEM 3: Effects of errors to retained earnings. While preparing the 2019 financial statements, Amber Company discovered computational errors in the 2017 and 2018 depreciation expense. These errors resulted in overstatement of each year's income by P100, 000, net of income tax. The following amounts were reported in the previously issued financial statements: 2017 2018 Retained earnings, January 1 2,000,000 800,000 Retained earnings, December 31 2,800,000 2,800,000 600,000 3,400,000 Net Income The net income for 2019 is correctly reported at P700, 000. Requirement: Compute the correct balance of retained earnings on December 31, 2019.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Ray Company, your client, failed to record accrued rent income of P 25,000 as of December 31, 2022. Based on the foregoing, answer the following questions: Question 1: Which of the following accounts is(are) understated by P 25,000 at the end of year 2022 as a result of the error? Question 2: Which of the following accounts is(are) overstated by P 25,000 at the end of year 2023 as a result of the error? Question 3: What would be the adjusting entry if the error is discovered in year 2022? Question 4: What would be the adjusting entry if the error is discovered in year 2023? Question 5: What would be the adjusting entry if the error is discovered in year 2024?
What is the net effect of the errors on the December 31, 2021 retained earnings?( Leave the numerical figure positive, put a dash then identify if OVERSTATED or UNDERSTATED, example: 25000-OVERSTATED)
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37 ABC Company reported net income and retained earnings for a two – year period as follows: Net Income Retained Earnings, Ending 2020 6,000,000 6,000,000 2021 8,000,000 14,000,000 In checking the statement for the year ended December 31, 2020, the following errors are discovered: The company paid one – year insurance premium of P 240,000 effective April 1, 2020. The entire amount was debited to asset account and no adjustment was made at the end of 2020. The company leased a portion of its building for P 480,000. The term of the lease is one year ending April 30, 2021. Collection of rent was credited to unearned rent revenue account. At the end of 2020, no entry was made to take up the earned portion of the amount collected. Depreciation expense in 2020 was understated by P 12,000. Depreciation expense in 2021 was overstated by P 14,000. Bad debts expense of P 11,000 was not recorded in 2020. How much is…